Correlation Between IShares Global and UBSFund Solutions

Can any of the company-specific risk be diversified away by investing in both IShares Global and UBSFund Solutions at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Global and UBSFund Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Global Timber and UBSFund Solutions MSCI, you can compare the effects of market volatilities on IShares Global and UBSFund Solutions and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Global with a short position of UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and UBSFund Solutions.

Diversification Opportunities for IShares Global and UBSFund Solutions

0.81

Correlation Coefficient

IShares Global  UBSFund Solutions

Very poor diversification

The 3 months correlation between IShares and UBSFund is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Timber and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI and IShares Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Global Timber are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of IShares Global i.e., IShares Global and UBSFund Solutions go up and down completely randomly.

Pair Corralation between IShares Global and UBSFund Solutions

Assuming the 90 days trading horizon iShares Global Timber is expected to under-perform the UBSFund Solutions. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Timber is 1.45 times less risky than UBSFund Solutions. The etf trades about -0.03 of its potential returns per unit of risk. The UBSFund Solutions MSCI is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,217  in UBSFund Solutions MSCI on September 26, 2024 and sell it today you would earn a total of  129.00  from holding UBSFund Solutions MSCI or generate 10.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	92.13%
Values	Daily Returns

iShares Global Timber  vs.  UBSFund Solutions MSCI

iShares Global Timber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Timber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

UBSFund Solutions MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBSFund Solutions MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with IShares Global and UBSFund Solutions

The main advantage of trading using opposite IShares Global and UBSFund Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, UBSFund Solutions can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in UBSFund Solutions will offset losses from the drop in UBSFund Solutions' long position.

The idea behind iShares Global Timber and UBSFund Solutions MSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.